YTC VS YTM

Sorry... Another post by me... To business/ finance people out there...

Regarding callable bonds again. Since I typed the following to XY, might as well post it up...

Cus T(typing) = sunk cost.

In the following paragraphs, YTC = yield to call; YTM = yield to maturity.

Analysis on the basis that YTC less than YTM => call at the earliest possible date.

Here, note the derivation of the YTC. It's already based on the assumption that the issuer works to the worst disadvantage of the investor, i.e call the bond at the earliest possible date since that would act to the least benefit to the investor. To further explain that, if the bond can be called between t years to n years (maturity), our calculations are based on the assumption that it will be called after t years, so YTC is calculated by setting P at today's selling price equals to cash flows from years 0 to t.

So let me emphasize again that the value of YTC is already based on the earliest possible date the bonds can be called and that the issuer cannot call any date earlier than that. (In fact, the earlier the bond is called the lower the yield rate of the investor.)

Somewhat a repetition of the previous post, just that YTC is brought to light here.

Hope it helps. =)

This time I didn't dig up last year's notes but I trust my understanding. Anything to correct, please tell me.

STAT (probability, models/ modelling), ECON (though need to read up a bit), FINA (mainly corporate finance), MATH (just a fair bit on proving techniques, linear algebra and multivariate calculus)...

If you need help, can ask me... Because it really helps me to recall whatever I've learnt.

And knowledge is cumulative. =P

Very cute...

Watch this: its very cute..but i dunno how to get the whole video here.

http://www.youtube.com/watch?v=yHnrUbtKQX0

and this:

Callable bonds

Sorry for having 2 posts in a row. But I think the following may be useful to classmates doing finance-related stuff. =) A little something I was discussing with XY~ Just for your information when you need it.

A callable bond is a bond which the borrower (issuer) has an option to redeem prior to its maturity date.

The investor should assume that the borrower will exercise the option to the disadvantage of the investor.

Given that the redemption value on all redemption dates are equal (note that we're taking an assumption here):

1) If i less than g or P greater than C, redemption date will be the earliest possible date.

2) If i greater than g or P less than C, redemption date will be the latest possible date.

(zzz damn irritating... somehow the greater than/ less than signs are rejected by blogger due to conflict with html code... zzz... !@#$%^&*)

If the redemption values on all the redemption dates including the maturity date are not equal, then it may be necessary to take some trial calculations at the various possible redemption dates to see which is the most unfavourable to the investor.

Some actuarial symbols here:

i = yield rate, yield to maturity, yield to redemption

g = modified coupon rate where Fr = Cg (F = nominal value, par value, face value; r = coupon rate, nominal yield; C = redemption value. Here, please also note that F != C)

P = price of the bond

C = (as mentioned above)

Earliest possible date here isn't disputable, and should be specified by the bond issued.

And here, the reason why I emphasized that the "investor should assume that the borrower will exercise the option to the disadvantage of the investor" is because the investor is the passive party. Pay special attention that the issuer is the one who would finally decide when to redeem the bond and it may not be the "earliest possible date". Therefore, as a third party, when we analyse such cases, we should take special consideration to the risk the passive party faces.

Hope this helps! =)

MAF (19092009)

OPS.

That balloon kept blocking my view! ><"

Woah~ I think this year decorations is the best I've seen.

More photos taken by Jean are posted on facebook. ^^

Sending niexin off (14092009)

62's everywhere!

Erm...this should be zoe..think she took her photo herself somehow..yeal..this is sunset on the top floor..

We're wearing the same clothes! so worldly..

Another 62. Haha..and we'll take more when we see more!

See what kind of question we get..

I am going crazy le...so many questions and so little time..I got 54 extra physics questions per week, and online, and its counted as part of the course marks...

Hey, check these out...
http://blog.jimmyr.com/Amazing_Hand_Art_17_2008.php
http://blog.jimmyr.com/Hardest_Game_Ever_19_2008.php

Visit other links too :) There are loads of creative, amazing and cool stuff.

Night cycling photos

Pointing fingers...

Interesting email

Have a good laugh with this Chinese delivery...

Enjoy its innovative delivery method, the Chinese way...Forget about DHL, UPS or even FedEx!!!

A family in the Southern Province of China, were puzzled when the coffin oftheir dead grandmother arrived from United States. It was sent by one of thedaughters. The dead body was so tightly squeezed inside the coffin, with no space left in it!

When they opened the lid, they found a letter on top; which read as follows:

Dear Cousins, I am sending Ah-ma body to you since it was her wish that she should becremated in the compound of our ancestral home in Tung Shin. Sorry, I couldnot come along as all of my paid leaves are consumed.

You will find inside the coffin, under Ah-ma's body, 12 cans of Yohmeitsu,10 packets of Swiss chocolates and packets of Chinatown Lap Cheong. Pleasedivide these among all of you. On Ah-ma's feet you will find a new pair ofNike Air shoes (size 10) for Ah boy. Also, there are 2 pairs of shoes for AhMei's and Ah Lien's sons. Hope the sizes are correct. Ah-ma is wearing 6 CK T-Shirts. The large size is for Ah Bak and the othersare for my nephews. Just distribute them among yourselves. The 2 new Armani Jeans that Ah-ma is wearing are for the boys. The Rolex watch that Lee Ah Bai wanted is on Ah ma's left wrist. Kiasu Aunty Pei Pei , Ah-ma is wearing the Tiffany necklace, earrings and ring that you asked for. Please take them.The 6 white Polo cotton socks that Ah-ma is wearing must be divided among myteenage cousins.

Let me know what else you need as Ah Kong also not feeling well nowadays. I can send all required things when our Ah Kong goes back too...

Hi, sorry if I didn't reply some of your questions because everything was not confirmed yet. But if you want to know,

People who are going are kw, phy, gz, jr, me, yuen, jackson and ch.

People who are joining later (after the movie) are jx, jh and nx.

Reminder:
meet at 12.30 at vivo GV for movie

cya :)

Nice video

This video very touching!

join us!

hey! for those interested in joining, inform either jingrong or me and we will send u the forms! lol class outing for a good cause ><

We are currently in need of volunteers for:

C.A.N. Collect ( 18th July, Saturday)

We will be having door to door collection of canned food, dried rations, etc from the residents living in the northwest region of Singapore.(Woodlands/Sembawang/Admiralty/Canberra areas)

It will be a one day event. Lunch will be provided.

For more information and updates about Project C.A.N. VI, you can visit our website at http://can.nus-csc.org/

Any enquiries, do feel free to contact us atprojcanvi.vm@gmail.com

pls do not forget the post below! ^^

outing! peeps!

hey peeps! lets have a kbox outing on this fri at marina square.

meeting place: city hall mrt control station
time: 1.30pm

after which will be dinner and htht(heart to heart talk) >< lol
please reply on the tagboard OR sms jr/jl of ur going. thanks